Priceline.com Inc. (PCLN) is set to report third-quarter 2013 results on Nov 7. Last quarter, it posted a 0.56% positive surprise. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Priceline’s share gains in both domestic and international markets led to higher sales growth rates in the second quarter of 2013. Also, overall bookings were up 10.5% sequentially and 38.0% year over year, which indicated improving demand environment. Gross margins expanded in the quarter, driven by higher revenues and steady ADRs in the hotels business.
For the third quarter, Priceline expects revenues to increase 23%–30% year over year, with pro-forma earnings per share to come in at $15.30–$16.30. The Zacks Consensus Estimate for the third quarter is pegged at $15.64.
Earnings Whispers?
Our proven model does not conclusively show that Priceline.com will beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESPand a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $15.64. Hence, the difference is 0.00%.
Zacks Rank: Priceline.com’s Zacks Rank #3 (Hold) when combined with a 0.0% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Melco Crown Entertainment Limited (MPEL), with Earnings ESP of +6.45% and a Zacks Rank #1 (Strong Buy).
Akorn Inc (AKRX), with Earnings ESP of +7.69% and a Zacks Rank #1 (Strong Buy).
Northern Oil And Gas Inc (NOG), with Earnings ESP of +3.23% and a Zacks Rank #1 (Strong Buy).
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